Reserve Bank of India: The Reserve Bank of India (RBI) has rejected applications filed by West End Housing Finance and two other institutions to open small finance banks. The RBI said in a statement that these applications have not been found eligible for in-principle approval required for setting up a small finance bank. RBI had received about 12 applications for license under the ‘ever-accessible’ system for general banks and small finance banks.
Decision was taken on six applications in May last year
RBI had decided on six of the applications received in May last year. Now RBI has also completed the review work of three applications filed for approval to open Small Finance Bank. Based on this, all the three applications have been found ineligible. These applications were filed on behalf of West End Housing Finance Limited, Cosmi Financial Holdings Private Limited and Akhil Kumar Gupta.
It is necessary to have assets of 500 crores at all times
RBI said that the work of investigation of other applications filed for banking license is still going on. On August 1, 2016, guidelines for granting licenses to the private sector for general banking under the ‘Sada Sulabh’ regime were issued. While these guidelines for Small Finance Bank were issued on December 5, 2019.
What is the rule of opening the bank
According to the guideline, the initial minimum paid-up voting equity capital for Universal Bank should be Rs 500 crore. Thereafter, the bank should have assets of at least Rs 500 crore at all times. On the other hand, the minimum paid-up voting capital for Small Finance Bank (SFB) should be Rs 200 crore. The initial capital for the willing application of the Urban Co-operative Bank should be Rs 100 crore. It is necessary to increase it to Rs 200 crore within the next five years.
